InvestorQ : How do I go about identifying stocks for intraday trading?
Ria Roy made post

How do I go about identifying stocks for intraday trading?

3 years ago
There are 5 very important steps in intraday trading that you need to be totally familiar with…
The first step in intraday trading is identifying the universe of stocks that you want to trade in. Obviously, your universe cannot be too large because how do you trade and track the charts of 100 stocks? That is just not done. You need to focus on stocks that are highly liquid and ensure that the stock prices react to news flows and technical patterns. Once the universe of stocks is shortlisted, then you can track these stocks and identify opportunities to either go long or go short for intraday basis. The universe of stocks needs to be reviewed regularly and need to be modified appropriately and this includes additions and deletions to your master list.
The second step is to use technical charts to identify levels to buy and sell stocks. Normally stocks are bought when it forms a base at the support trend line or breaks out of a resistance. One is a bounce and the other is a more decisive breakout. Similarly, stocks are sold when the stock meets a resistance or breaks below the support level. Normally, intraday trading decisions are taken based on price and volume support. It is only when both converge that you can get a clear and reliable buy or sell signal.
Once the stock and the level are identified, the next step is to place the intraday order. You need to take a decision on the order type based on the volatility in the market. Your decision to opt for a market order or limit order or even an immediate-or-cancel (IOC) order should be entirely based on which method can give you the best possible price and the required quantity.
Now you come to monitor the order. That is a very critical step and involves a lot of time, energy and bandwidth on your part. Once the order is executed the next step is to monitor the order. Open positions must be monitored based on technical charts, corporate announcements, news flows, global news etc. The idea is to look out for triggers that can have an impact on the stock price so that decisions can be triggered immediately and necessary action initiated.
Finally, take full responsibility for the trade end to end. You have to take it upon yourself to close the loop completely. The loop must be closed and the trader must ensure that the order is closed before 3 pm itself. Normally, brokers tend to run their MIS and force close all orders of MIS types by 3.15 pm. Don’t wait till then. You must act much earlier. That way you get the best price for closing the trade. Keep a tab on your profits and losses and how it is impacting the base capital that you had infused into the stock markets for intraday trading. Keep limits for that!